A ministerial committee is set up to hire financial advisors for arranging funds. PHOTO: FILE

ISLAMABAD: A ministerial committee was constituted on Tuesday by the Economic Coordination Committee (ECC), to hire financial advisors for arranging funds for the construction of the Iran-Pakistan gas pipeline after a Chinese bank backed off due to increasing US pressure.

The ministerial committee, to be assisted by three federal secretaries, will review options of a possible deal with China, Russia or Iran with regards to the construction of the 800 kilometre pipeline from the Iranian border to Nawabshah.

Headed by Finance Minister Dr Abdul Hafeez Shaikh, the ECC directed the ministerial committee to finalise its recommendations as early as possible, to meet the project completion deadline.

The committee will comprise of Minister for Petroleum and Natural Resources, Minister for Water and Power, Governor State Bank of Pakistan, Secretaries Economic Affairs Division, Petroleum, Finance and Deputy Chairman Planning Commission.

The decision to go ahead with the pipeline project came despite the US “warning” to look for alternate options and abandon the Iran project. The US has threatened to impose sanctions on companies that deal with Iran.

According to a summary tabled by the Ministry of Petroleum, the Industrial and Commercial Bank of China (ICBC) was backing off from signing the pipeline construction deal. It said that the delay in signing may result in an overall delay of the project.

“The possible reason for not signing the agreement could be the changing geo-political situation in the region,” the official documents stated.

The petroleum ministry has sought ECC permission to cancel the contract with the ICBC and sign a new one with the second lowest bidder.

The ministry also recommended that the governments of China and Russia should be approached for project funding. But to go with this option, a waiver from public procurement regulatory authority rules will be required, ministry officials said.

According to another option, Iran could also be approached for the construction of the Pakistani portion of the pipeline.

As I have said before — China is a closer friend to the USA than Pakistan is or ever will be. Why would they offend the USA and face possible UN blow-back over a deal with a Pakistan who doesn’t have the money to pay for the gas let alone repay the loan.

@Cautious: Well said, but does US have enough money to pay off its own debt? Why don’t our US FRIENDS sit back home and resolve own internal issues rather than leaching to and causing sustained damages to Pakistan?

ICBC is very bank with good reputation.They would not back out of their commitment unless there has been breach of terms by other party.
250 million USD is not a big amount for a country like Pakistan.There are dollar billionaires Pakistanis who can acquire the expertise to complete the project on time with least wastage.
Why not tap them? For once let us do a project without a kickback and in national interest.

@jerseybb: “Every year Overseas Pakistanis send more than $12 billion, why can’t they use a quarter of a billion out of that ?”

The money they send does add to country’s forex reserves. It however cannot be used by government for its expenses. Why? That money is in bank accounts owned by relatives for whom it was sent in the first place. Thus it is not accessible as a funding source by the government for projects such as this.